JGP

well i listened to zero of the "not chasing power" sentance.
 
12:1 compression
ported alloy head (send it off to someone)
Slydogs old solid cam
e85 (its easy to get nowadays)
triple webbers/600cfm carb
and shes apples mate.
 
but in all seriousness, that motor sounds clapped, don't bother trying to toy with it, you will just kill it.
what state are you in? depending where you are maybe can reccomend someone?

Definitely pull the motor and rebuild it mate. When I bought my Ghia wagon, it had a recod motor (only done 5000kms when I bought it).
Cost the guy selling it 1900 to rebuild it fully.

I have just paid $3500 for a full engine rebuild that included new pistons, new double valve springs with damper, replace every bearing in the motor, head work including resizing valves and enlarging the head to match valves, fully balanced engine from harmonic balancer to pressure plate and I could keep going. If you take out all the performance work I had done the bill would be under 2 grand.
So if your budget is 4 grand then you will easily be able to rebuild your motor(or buy a secondhand one for a couple hundred) and still have money for buying parts

Could go a reco long engine from a reputable builder if you don't have to do it yourself. They often do engines 5 or 6 at a time so can save in labour and parts are bought in bulk. You could get maybe 20% more performance using stock bits without over-stressing things. Cam could be 1 or 2 steps up from a towing cam. Otherwise, nothing more to add than what the other lads have already said.